Viewpoint -- Marketing Your Mousetrap: A New Source Of Liability For Business?

Promoting your product for its intended use could land you in the courthouse.

By James P. Dorr, a partner with Wildman Harrold, a law firm. | Aug 02, 2006

Two recent court decisions involving lead paint manufacturers raise a troubling specter for business: simply promoting your product for its intended use could land you in the courthouse defending "nuisance" litigation.

In Rhode Island, a jury recently found three manufacturers liable for the abatement of lead paint in buildings throughout the state. This was the result of a suit brought by the state against the manufacturers for creating what it called the public nuisance of lead paint in buildings dating from the early twentieth century until the 1970s. What makes this case unique -- and troubling -- is that, prior to its deliberations, the jury was instructed by the court that it could find the defendants liable even without proof of fault or proof that their products were even present in any Rhode Island building or had ever been sold in the state.

Similarly, a California appellate court has permitted the County of Santa Clara and other governmental entities to proceed with their own nuisance suit against lead paint manufacturers. That court also made the troubling statement that, "the alleged basis for defendants' liability for the public nuisance created by lead paint is their affirmative promotion of lead paint for interior use, not their mere manufacture and distribution of lead paint or their failure to warn of its hazards."

The lead paint industry is not alone. Claims have been brought against alcoholic beverage manufacturers based on the consumption of their products by minors. Fast-food businesses have been targeted for the sale of food products alleged to cause obesity or other unhealthful conditions. Similar theories of liability for selling non-defective, legal products have also been advanced against the manufacturers and distributors of firearms. These suits have alleged that the firearms industry "oversupplied" the legitimate market, creating a secondary market in which those not entitled to possess a firearm could acquire one, leading to criminal activity and firearm violence.

What's most troubling about these cases is that they have made the very act of doing business a new source of liability. For example, in holding that a manufacturer can be liable in nuisance for promoting its product for its intended use, the California court swept away decades of law governing liability for the design and manufacture of products, leaving behind a decision of uncertain precedent. This has implications that reach far beyond those companies already touched by nuisance litigation. In fact, any manufacturer could find itself facing similar court actions.

The reason? Every manufacturer must promote its products to stay in business. No product is risk-free, and it is impossible for a manufacturer to limit the use of its product to solely legitimate or responsible users. Expansive theories asserting liability for product promotion, marketing, and supply, thus, could threaten virtually any manufacturing industry. Even when suits of this type can be disposed of at an early stage, the burdens of defending against litigation can be costly, not just financially but also in the expenditure of company time and in the disruption to daily operations that litigation usually entails.

Many of these cases are instigated by social policy groups looking to use the courts to bring about change where they feel legislators have failed. On other occasions, litigation is brought by state attorneys general or municipal entities seeking both monies for public coffers and favorable political recognition. And, of course, plaintiffs' counsel seek to add to their own assets that have already been swelled by tobacco and other settlements.

Frequently, plaintiffs' counsel seek to support the claims made in the initial pleading by relying on the manufacturer's advertising, its web site, agreements with downstream distributors, or trade association activities. Indeed, the circumstantial demonstration that lead paint from the manufacturer defendants was present in Rhode Island consisted almost entirely of defendants' ads for paint which had run in Rhode Island newspapers during the first half of the twentieth century.

In the face of these threats, it is good policy to stay alert to the implications of any pronouncements from advocacy groups concerning your industry. Recent developments in product liability or environmental litigation, and the activity of pertinent regulatory agencies or attorneys general can also be a clue to another industry that is being newly targeted for litigation.

If an issue appears on the horizon, be proactive. Develop an overall strategy and an affirmative action plan which includes input from marketing, governmental affairs, public relations and experienced legal counsel. Remain open to the complaints of advocacy organizations, since their demands for changes may mirror your own interests and your responsiveness to them could stave off litigation. This preparedness will mean that, at the very least, if litigation develops you will be properly positioned to defend these cases, which typically will be filed in multiple courts and may involve your entire industry. A coherent defense strategy and effective coordination in different jurisdictions and among multiple defendants is critical

James P. Dorr, is a partner with Wildman Harrold (Chicago). He has been at the forefront of defending industries, including the firearms and chemical industries, against these emerging theories of liability. He is available to discuss this recent shift in theories of liability and what businesses in all industries need to know. His email address is: [email protected]